What is the law of supply?

The law of supply states that, all else being equal, an increase in the price of a good will lead to an increase in the quantity supplied. This principle reflects the behavior of suppliers in response to price changes; when the market price of a product rises, producers are typically encouraged to supply more of that product to maximize their potential profits. Conversely, if prices decrease, suppliers are likely to reduce the quantity they are willing to supply since the incentive to produce at a lower price diminishes. This direct relationship between price and quantity supplied is fundamental to understanding how markets function and how suppliers respond to changes in demand and market conditions.

The other options do not accurately capture the essence of the law of supply. The first option presents a misunderstanding by suggesting that supply remains constant regardless of price. The second option pertains more to the law of demand, which focuses on the relationship between price and quantity demanded rather than supply. The fourth option incorrectly implies that supply only increases during economic booms, overlooking the continuous and responsive nature of supply to price changes throughout various market conditions.